While technology innovations and the Internet has clearly democratized the process for creating and distributing video content, one major barrier to entry at the most fundamental level still exists for individuals who want to succeed. That is the skill-set required for compelling story-telling and engaging your audience. This becomes even more important for the long-form content.
With the explosion in the popularity of online video and emergence of firms (Brightcove, Metacafe, Revver, etc) that provide an opportunity to make money to any user who can create content, we're clearly in a new era where one does not need big media firms to launch his/her career. I'm sure most of us welcome this democratization process. Even the price barrier has gone down significantly - these days you can produce professional looking videos using sub-$1k digital cameras. However, just because you can easily create and distribute content, it does not necessarily translate into the ability to make a living out of it. Metacafe pays producers a CPM of $5. Your video therefore needs millions of views for you to make sufficient money to earn a living. Last I checked, the most viewed video on MetaCafe (Matrix - For Real) had earned $26,680 for its producer over two years and five months. All other videos in that list had earned under $8,000. Most other online firms won't disclose the average income for content owners who're utilizing their distribution platforms.
The main reason, in my opinion, is that these short video clips can provide a "snack value" to the audience, but not the "entree" that is required to engage them long enough to command higher CPMs from advertisers. The types of Lonely Girl 15 are few and far between, which by the way was a series of short clips as opposed to long episodic content. The other reason is that the online business models, though constantly evolving, are still not attractive enough for content creators.
Compelling story-telling to engage your audience over a long duration is an art - a very difficult one. Traditional media firms know it well enough to pay big bucks to producers who have mastered this art. And these producers, some of whom even after openly criticizing the concentrated power of big media, will not abandon them to exclusively produce for and distribute on the Internet until the online economics improve significantly to provide comparable earnings, which is unlikely in the near future.
Until then, we may find more and more talented independent online producers switching to traditional firms, especially if they can get an opportunity to bridge the gap between old and new media. Amanda Congdon's move from Rocketboom, a popular online video blog, to ABC News last Fall may be the most famous example of such a switch, but it might become a norm rather than staying as an exception, with the Internet providing the platform for getting discovered.